Argument Recap / Panel Activity

Last week the Federal Circuit heard oral argument in four cases that attracted amicus briefs. In one of these cases, Modern Sportsman, LLC v. United States, former owners of bump-fire type rifle stocks assert the Bureau of Alcohol, Tobacco, Firearms and Explosives committed a taking under the Takings Clause of the Fifth Amendment. This is our argument recap.

Jennifer Gelman argued for Modern Sportsman. She began by describing the ATF’s final rule as “banning bump stock devices.” According to Gelman, “that rule required everyone who has lawfully purchased a bump stock to either destroy the bump stock device or abandon it at an ATF office.”

Before she could continue, Judge Wallach interjected. First, Judge Wallach asked whether the government’s argument—”that the Supreme Court has never held that a statutory prohibition on dangerous personal property, as opposed to real property, constitutes a taking”—is a correct statement. Gelman replied that she did not “know of any Supreme Court case that holds a prohibition on dangerous personal property is a taking” and argued that “this is a fairly novel situation.”

Next, Judge Wallach asked how the argument that the Supreme Court’s early police power cases were made in the context of a mere diminution of property values “square[s] with Samuels v. McCurdy.” Gelman pointed to two reasons. First, she argued, Samuels is among a group of cases that “do not apply to cases where all value have been taken from property.” Second, she contended, “in Lucas v. South Carolina, Justice Scalia explained that these cases cannot be used in the modern context the way they existed in late-19th century or beginning of the 20th century. “

Judge Wallach followed up by questioning the argument that the final rule “was not an exercise of police power because it was prompted by a change in policy, not by greater familiarity with bump stocks.” In this regard, Wallach asked, “didn’t the shooting in Las Vegas make the public and government more familiar with bump stocks?” Gelman admitted that “it certainly did alert the public and the government to what a bump stock is capable of doing.” According to Gelman, however, that is not “the same as explaining or showing how a bump stock functions, and how a bump stock functions would fall under the statutory language of what constitutes a machine gun.” Thus, Gelman argued, the Las Vegas situation “couldn’t have possibly said anything about that.”

Judge Taranto then posed a line of questions. He first pointed out that in “some of the older cases . . . a person can acquire title to property, real property, personal property, maybe both, at a time at which it was perfectly lawful to do so, but that later event can turn future possession into an illegality for which there is no compensation,” and so he asked “why should this case not be [treated] like that?” Gelman responded by arguing that “this is a very narrow line of cases in which the seizure was a part of the government’s administration of our justice system.” Moreover, Gelman argued, “these cases were specific seizures of a specific piece of property for the purpose of the administration of the criminal justice system.”

Judge Taranto then asked: “Why should the agency making an implementation choice not have the same effect as a title limitation being triggered as automatically effectively transferring the title away from previous acquirer?” Gelman responded by arguing “that there would have to be . . . an independent preexisting limitation on the property for the machine gun ban to serve as a limitation on the property of the owner of a bump stock.” Moreover, according to Gelman, this “would be strange” here given that “over the course of some 10 years, after bump stocks first began to be manufactured, the ATF issued letters assuring the public that bump stocks are not machine guns under the language of the statute.” Gelman admitted that “the ATF is allowed to change its mind, and that’s exactly what it did in the case of the Akins Accelerator, but in that case the agency issued an interpretive ruling designating the accelerator as banned by the machine gun statute.” Gelman argued that, in contrast to the legislative rule at issue here, “an interpretive rule is retroactive.”

Judge Chen pressed Gelman on the importance of classifying the ATF final rule as legislative as compared to interpretive. He asked, “why should that matter?” According to Judge Chen, “the statute banning machine guns authorizes the government to enforce and interpret that statute to ensure that devices that can convert a weapon into a machine gun are likewise outlawed; . . . if that is all the government is doing, then the government was authorized in making that interpretation whether you want to call it a legislative or interpretive rule.” Gelman responded that Judge Chen’s argument “would be correct if our lawsuit was challenging the validity of the rule, but it is not challenging the validity of the rule, it is only about whether this is a taking.”

Kenneth M. Dintzer argued for the United States. He began by replying to some of the Gelman’s responses to questions posed by Judges Taranto and Chen with regard to the bundle of property rights held by the former owners. Dintzer argued that “the plaintiffs never owned the property rights that are the basis of their claims.” Dintzer contended, for example, that “they have no property interest in the ATF’s letters.” According to Dintzer, “the letters offered a safe-harbor, but they described the ATF’s official position, and counsel acknowledged that the position could change and they could not have a property interest in those.” In response to a question from Judge Taranto, Dintzer rephrased his argument: “Their property interest could not have been expanded or protected by those letters; those letters were subject to change as ATF says; [and] they could not have created any of the sticks in the bundle of rights, which meant that they could have been withdrawn at any time.” According to Dintzer, this “means two things: the letters were withdrawn and a new rule was put into place.”

Judge Chen then sought clarification regarding the letters. He stated: “I’m trying to understand: what is the purpose of the letters? The way you are characterizing them, they almost sound like a mirage, that nobody should have relied on them, and I was under the impression that the letters were something that these owners are entitled to rely upon.” Dintzer responded by pointing out that the ATF said they were “subject to change.” Chen interrupted Dintzer to ask if “the letters precisely say ‘we hereby reserve the right to potentially change our view of this matter?'” Dintzer admitted that “the letters didn’t,” but, he argued, “in the National Firearms Handbook, where it authorizes the letters, it says ‘classifications are subject to change if later determined to be erroneous or impacted by subsequent changes in the law or regulation.’”

Judge Taranto then asked Dintzer to address a decision of the D.C. Circuit. According to Judge Taranto, that case “made . . . a rather large point in saying that it really was quite important that possession before the date of the rule not be declared illegal.” In response, Dintzer argued that while the D.C. Circuit “did make the distinction between legislative and interpretive,” the case is not relevant to the analysis of a taking or the analysis of police power.

Judge Wallach posed a final hypothetical for Dintzer. In Judge Wallach’s hypothetical, he asked Dintzer to “suppose the FDA approved a drug for a particular important medical use, and patients are using it and keeping them alive.” He continued: “But some years later it starts being used for a very dangerous recreational purpose.” Judge Wallach then asked: “Could the FDA ban it entirely despite the continued reliance on the patients to keep them alive?” Dintzer responded by first making an assumption that the FDA had “the legal authority to ban it.” According to Dintzer, “if your question is if that results in a taking, that would not.” Moreover, Dintzer argued, “presumably one of the purposes of the FDA is to say these drugs are safe and these drugs are not, and if they say one drug is not safe, that falls within core police powers.”

In rebuttal, Gelman first responded to the government’s position that the letters did not create any property rights for the owners of bump stocks. Gelman contended that “it was never articulated or mentioned that the letters created property rights.” Moreover, Gelman argued, “the property rights came about simply by virtue of . . . being a purchase of a consumer product; there was no law in place [and] there was no reason why the owners of bump stock would not expect a bundle of rights in the bump stocks they purchased.” Moreover, according to Gelman, “there was nothing in the machine gun ban that applied to the bundle of rights at that time.”

Second, Gelman contended that “when the government [argues] it would have been possible to take someone to court to prosecute [that person] under the machine gun ban it is pure speculation.” She argued that, “in fact, the legislative rule that the ATF chose is highly indicative that the agency itself understood that the machine gun ban standing on its own would not be sufficient on its own in order to prosecute someone for owning a bump stock. Summing up her argument, Gelman asserted that “the bundle of rights that owners had had nothing to do with the letters; that is simply a confirmation of the ATF’s view before they made a policy decision that bump stocks ought to be covered by the machine gun ban.”

We will keep track of this case and report on its disposition.